At the work lunch table, we were talking about money, the use of credit cards, child allowances and salary payment schedules. It was interesting to consider, because there were various viewpoints coming from people who were in different stages of their lives in terms of age, job roles and their life situations.
It started with a discussion about how strange it is that some people still like to use cash, and I said that given the option, I do too. For me, this isn't about not being tracked (though I like that aspect of it), it is because I like the feeling of having money, and losing money as I spend it. Having it in cash makes it real and this means it has a different psychological impact to lose what we own. Even though we don't actually own the fiat we have. But that is another story.
While people at the table agreed, most also said that the convenience of cashless outweighs the gain, with one commenting how they don't have to worry about what comes out of their account. This moved into the conversation of being good with money or not, with another saying that they are bad, but luckily they have a job that earns well, so they can afford to be bad. Nothing wrong with that admission, but it is also not the general conditions for people.
In Finland, pretty much everyone is paid monthly, with some "low-paid" jobs maybe biweekly. In Australia when I was there, working a job like McDonald's the salary was weekly. A full-time job at a retail outlet was biweekly. And a lawyer would be monthly. This means that the lowest paid people are never more than 7 days away from their next paycheck, the higher paid are 30 days away. Some entrepreneurs might be looking at yearly, or even longer.
The longer the pay cycles, the more important money management becomes, but if we aren't practicing developing the habits when we are young, we are more likely to struggle later in life. Just like we teach kids to wash themselves and brush their teeth properly, we should also be teaching them about financial hygiene and their habits around instant versus delayed gratification, saving, patience leading to larger rewards and the impact money, or lack of money has on our lives.
But, a conversation alone isn't enough, as the impacts are often visceral, they are felt. If the training process doesn't teach the emotional lessons, it becomes an academic exercise, which is unlikely to be applied. For instance, I was asking what people did in terms of paying allowances to their kids, and they all did it weekly, but we all get paid monthly. Perhaps it would make more sense to pay when we get paid, meaning that kids would have to do their chores or whatever, but not get the reward straight away. And then, when they do get the money, it is a larger sum that they can do more with, but have to consider whether they want to go a month until the next payment.
Perhaps this would help kids not only learn some delayed gratification behaviors and manage their money better, but also get that feeling of lumpsum, where they are more likely to feel the ownership and the sense of loss in the spend. With "more money" further away, they may be more conscious and aware of the value of what they have in their hand, and less likely to want to let go of it.
We were also talking about how Finns pay their bills on time and I was interested in whether this has changed in the last twenty years. When I came to Finland, credit cards were barely used and the idea of being on credit for anything other than a house or maybe a car, was almost unheard of.
I arrived in 2003.
Finland Households Debt To Income
So the trend had already started.
What is interesting is that in 2002, Finland changed from the "Finnish Mark" to the Euro, which pushed up a lot of prices. The other thing that happened around that time was the digitization of a lot of the money services, which made it very easy to use debit cards without any fees. In Australia at the time, using a debit card was *very expensive, where for instance my bank gave only 8 free transactions a month, with subsequent transactions being between 1 and 2 dollars.
Imagine paying that for every digital transaction now.
While not the only facto, I posit that the digitization of our money has made it easier to spend at all levels, including psychologically. Being further removed from the sense of ownership means that we are no longer attached to what we hold, more likely to spend, more likely to be in debt and more likely to be negatively impacted by our consumer behaviors, as we consume increasingly more than we earn.
Whatever the story, we are likely on average getting worse at managing our personal finances, so if we as individuals want to improve our economic activity, we have to look at the conditions and behaviors that lead in that direction. Most of us are surrounded by advertising, and buying digitally is simple. We subscribe to multiple services and we are accustomed to getting everything we want, on-demand. Just like being a week away from the next paycheck, we are never more than seconds away from satisfying our content wants - so what does this teach us about delaying our gratification?
Most kids these days can't even invest themselves for two hours into a movie, but they can spend five hours watching five minute clips, whilst scrolling through a feed of short-form, low-value content. In my head, these things are all related. As are the diverse set of problems we face as a society.
Taraz
[ Gen1: Hive ]
